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Construction recession ‘ended in June’

Economists have reacted with surprise at Office for National Statistics (ONS) figures released this week showing the construction industry has been growing since June

The Q3 ONS construction output data, as reported in Construction News, showed output grew by 2 per cent in the three months to 30 September on the back of a £1 billion increase in repair and maintenance work.

With a revision adding nearly £600 million of new work to the Q2 2009 figures, the ONS is suggesting that the industry actually came out of recession in June.

Last month’s overall GDP figures from the ONS showed construction output declining 1.1 per cent in Q3, based on forecasts taken from a quarterly construction trade survey by credit agency Experian.

The latest figures are taken from the ONS’ quarterly survey of 12,000 VAT-registered construction businesses about the value of work done in the quarter.

The 2 per cent rise in construction output means the UK’s GDP as a whole fell by just 0.2 per cent in Q3. With revisions in other sectors expected later this month, it could be that the UK is already officially out of recession.

An ONS spokesman said: ‘It is a big robust survey and we have good coverage of the industry. We are confident in our results.’

Construction Products Association economics director Noble Francis said the rise in R&M work, led by nearly £500m of public sector non-housing jobs was ‘somewhat of a surprise’.

He said: ‘It is a low profile area where the Government could cut spending without making too many headlines. Public repair and maintenance work is only very basic repairs like potholes on roads so it is hard to understand where all this extra increase has come from.’

The growth comes on historically low figures, with industry output of £25 billion in Q3 9 per cent down on the same quarter in 2008.

Allan Wilen, economics director at business intelligence unit Glenigan, said: ‘The current rise in repair and maintenance work may prove short-lived.

‘In particular, public sector repair and maintenance work will come under increased budgetary pressure over the next year.’

The latest figures show R&M totalled £11.4 billion in Q3, up 10 per cent on Q2. But that was offset by a fall in new work of 4 per cent from £14.2 billion to £13.6 billion.

Readers' comments (1)

  • It seems a mix response coming up on this topic.I think that the construction recession is not yet over becuase most of the states are still feeling the heat of recession.Because most of the construction companies are not able to bid for the new projects and most of the construction companies have halted their ongoing projects.

    Portable Storage,

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